Due to the nature of the agriculture sector, the identification and management of climate related risks is integral to all investment decisions, and throughout the holding period. The principle climate-related risk for SilverStreet Capital's portfolio companies is climate variability - the risk that our businesses in the agricultural sector will suffer due to unpredictable weather, changes in the environment or seasons, water security, and temperature changes.
To mitigate against possible changes in temperature, SilverStreet Capital exclusively invests in the best possible locations for the production of each crop or animal. This protects our production against changes in the environment.
All our operations manage their water use and take extreme care to minimise volumes used. Technologies to aid in water management and improve water use efficiency include flow meters, variable speed drive pumps (VSDs), drip and micro-sprinkler irrigation systems, soil moisture probes, weather stations, evaporation pans and automation methods.
We, additionally, practice minimum tillage on our farms, and teach this to smallholder farmers. This results in increased moisture retention in the soil, reducing irrigation needs and enhancing drought tolerance in lower rainfall years.
We continue to implement clean energy solutions, and solar and hydroelectric power developments to help reduce reliance on fossil fuels and unreliable grids. This includes a solar power facility in Namibia and a hydro-electric power facility in Tanzania.
Globally, agriculture is under pressure to produce more, on the same area of land, and with less resources. The majority of the world's population growth between now and 2050 will come from Africa, with estimates from the UN showing an increase from around one billion people now to over two billion in 2050. Most countries have food deficits already and a huge sustainable increase in yield productivity is necessary to meet future food requirements. This challenge presents a unique opportunity to use strategically invested capital to fix some of the challenges in the various crop value chains. Specifically, to raise productivity sustainably without perpetuating agricultural practices that harm the environment. This can be achieved through investment into products and practices that can increase yields for smallholder farmers across Sub-Saharan Africa, without the need to increase land areas, which results in vast greenhouse gas emissions.
To achieve this smallholder farmers need access to:
- markets to enable them to grow higher value crops;
- high quality improved seed;
- training in conservation farming techniques;and
- storage facilities.
Using a hub out-grower model, it is possible to integrate these solutions into a centralised investment. In this model a business 'hub' is established that includes processing of a higher value product and provides assistance to smallholder farmers to help grow this product. The hub can also provide technical support, training and improved inputs - enabling farmers to reach their production potentials sustainably. This innovative, and integrated solution has proven successful in galvanising markets, raising incomes and reducing unsustainable land practices.